Permanent magnet synchronous machine is a compact and efficient machine with advantage of high energy density. In present scenario, the industrial use of permanent magnet machines increases tremendously. Therefore, condition monitoring and fault diagnosis of PMSM gaining more and more attention. This paper presents a study to address eccentricity and demagnetization faults in rotor of permanent magnet machines using FEM (Finite Element Method) in Ansys Mexwell-2D Environment. In context to PMSM faults, eccentricity faults accounts for nearly 10% of total faults of the machine. In present investigation, the eccentricity faults study is carried out to different level of severities ranging 10-40 ^% and the radial components of airgap flux density spectrum of every severity level including its FFT is compared with healthy machine spectrum. The design process includes imperative assumptions and evaluates machine parameters. The design incorporates V-type magnet structure and NdFeB (N42) to utilize as rare earth material. The analysis results determine the effectiveness of anticipated machine design.